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Marketplace Instability May Cause Affordable Care Act Reforms

How will instability on the health insurance exchanges affect the future of the Affordable Care Act?

By Vera Gruessner

While the Patient Protection and Affordable Care Act has decreased uninsurance rates to historically low levels, the healthcare law also led to higher premium costs and insurance rates among health plans sold on the health insurance exchanges. The Affordable Care Act has brought an additional 20 million people into the health insurance market while eliminating pre-existing condition clauses and requiring payers to cover the costs of preventive services.

Health Insurance Exchanges

The risk pools for payers operating through the health insurance exchanges lacks healthier, younger populations, which is also leading payers to lose revenue. Joel Ario and Chiquita Brooks-LaSure, Managing Directors at Manatt Health, discussed some of the biggest regulatory issues of the Affordable Care Act and the solutions that could help improve conditions for commercial payers operating through the exchanges.

“On the marketplaces, payers face a problem of not enough enrollment. There is currently an older and sicker pool than the insurers were counting on,” Ario told “That is why there have been issues with participation on the exchanges among payers. Having said that, there is currently a solid risk pool that has staying power so no matter what happens, the Affordable Care Act will continue and that risk pool will work primarily because there are a lot of people that get  subsidies in that risk pool. It’s not going away.”

“It could be better if there was broader enrollment and that is primarily what insurers want to see,” he continued. “The second challenge is to make sure that as many people as possible are continuously enrolled in the program, so that payers do not have people coming in and out of the program. These are shared goals between insurers and the Obama administration.”

Chiquita Brooks-LaSure pointed out some of the regulatory challenges commercial payers have with Medicaid, Managed Care, and other programs from the Centers for Medicare & Medicaid Services (CMS).

READ MORE: CBO Score Confirms Industry’s American Health Care Act Concerns

“The Marketplaces and exchanges gain the most attention and concern,” Brooks-LaSure explained. “In terms of Medicaid and Managed Care, we’re seeing across the country increased penetration where more populations are moving into managed care plans. The recent Medicaid/Managed Care rule has a lot of attention paid to alignment and trying to align with the rules of the Marketplace and with Medicare. This is a priority to insurers since more of them are participating in multiple programs across the Marketplaces, Medicaid, and Medicare.”

How can the problems surrounding the Affordable Care Act be fixed? Most of the issues will need to be solved on a federal level. The next presidential election could be pivotal. On the Republican side, there is a continual push to repeal the Affordable Care Act, allowing health plans to be sold across state lines, and creating health savings accounts while Democratic Presidential Nominee Hillary Clinton looks to build onto the Affordable Care Act and expand Medicaid coverage further.

“There are several issues that are on the horizon regardless of the outcome of the election. One of the key differences would be how these issues are addressed. The issues include drug costs, marketplace stability and the future of ACA,” Brooks-LaSure added. “Hillary Clinton has been very forward leaning and has wanted to address drug costs. Clinton is also looking to make changes to the Affordable Care Act in order to stabilize the exchanges and improve affordability.”

“Trump has had less focus on health but has commented that he thinks drug pricing should be addressed and that Medicare should be able to negotiate," she continued. "It’s harder to tell where Trump would be, but thinking about the election, it’s worth looking at the Ryan plan, which is a more traditional Republican view of addressing these concerns. His plan is comprehensive.”

Ario also offered some solutions that may come from the Clinton camp and the Trump side. Hillary Clinton may push forward new tax credits to reduce cost sharing burdens while Republicans are more likely to encourage the use of high deductibles to keep premiums down.

READ MORE: Payers Face 9.6% Underwriting Loss on Health Insurance Exchange

Additionally, there will be efforts to block grant Medicaid to the states if the US sees unified Republican control while a President Clinton would look to expand Medicaid in the 19 states that haven’t expanded their Medicaid programs yet.

“The Republicans, if they win the White House and the Senate and the House, they would have to try to repeal the law as they promised in their campaign,” Ario noted. “I think they would be unsuccessful at that. Then they would have to fall back to making some modifications of the ACA that would roll back some of the coverage and try to diminish the cost to the federal government of the program. I think the Democrats would strongly resist that, so it’s unclear how far Republicans could get even under an all Republican administration.”

“If the Democrats win either the Presidency or the Senate, there likely would be divided government since the Republicans are likely to hold the House," explained Ario. "Generally it would be hard to make many changes to the Affordable Care Act through Congress in these scenarios. There would be sharply different opinions between the Republicans and the Democrats. More focus will be on the administrative agencies particularly CMS and there are things that both candidates could do there.”

What should private payers watch out for in the coming year when it comes to healthcare reform? What changes could occur to the Affordable Care Act and the insurance exchanges? Market stability will likely continue to be an issue that the government will need to address next year.

“Market stability in the exchanges is a key issue that either administration will have to address. That will be a critical issue for payers because they’ll want to be at the table to help craft whatever those remedies might be,” Brooks-LaSure said. “That’s going to be a very clear issue for them. Regulatory alignment and CMS looking across the programs and trying to make consistent decisions [will also impact payers].”

READ MORE: HHS Secretary Price Voices Support for House ACA Repeal

“One of the areas they’re very focused on is transparency and trying to make it easier for consumers to choose between various plans. That has driven interest in additional consumer tools,” Brooks-LaSure continued.

Ario explained that payers will focus on marketplace reforms that expand enrollment and “have as many people as possible continuously enrolled in coverage so that there is more stability and balance in the risk pool.”


Dig Deeper:

How the Affordable Care Act Changed the Face of Health Insurance

How Payers Could Succeed in ACA Health Insurance Exchanges


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